The Government of India has announced launching the second edition of special refund fortnight from May 31st to track the refund payments. The centre believes that the refund amount which is pending comes somewhere between Rs 9000-10000 crore. However, the Industry body Federation of Indian Export Organization is expected to be over Rs 20,000 crore.
What is Special Refund Agreement?
During this 15-day special drive, the government will initiate refunds for both Integrated GST (IGST) paid on exports and GST paid on inputs. “The endeavor is to clear all refunds this time. The last fortnight had primarily focused on clearing refunds of IGST paid on exports but this time, all refunds are likely to be cleared,” a senior government official said.
Complaint of Exporters
For long, exporters have been complaining that the significant delay in releasing the refund has impacted the working capital. Due to the slow process, the need of working capital has surged significantly. Not only this makes the whole process a little taxing but also reduces the competitiveness of these exporters in the market. Now, the working capital issue becomes even more severe because the banks have been practicing the credit squeeze therefore impacting the export directly. This has again increased the cost of the exports somewhere between 1% and 3%.
Inefficient Process for ITC Credit
Yet another issue raised by the creditors is the glitches that they come around while filing for the refund of ITC. The issue here is that the process is partially electronic and partly manual which not only takes more time but also transaction cost balloons considerably.
Pre-requisite for claiming Credit
- GSTR-3B for the month should be filed
- Table 6A of GSTR-1 has been filed before the claim
- Details of Shipping Bill and Invoice provided in Table 6A of GSTR-1 should align
- The IGST amount mentioned in GSTR-3B is equal or more than the IGST mentioned in Table 6A of GSTR-1.
The Act establishes the fact that 90% of the refund is processed on a provisional basis within seven days of application for refund. Overall, exports are the backbone of any economy, generating the employment opportunities and helping the country to lower down its deficit. Therefore, the government should make sure that the operations of the exporters do not stumble because of lack of credit and proper finance arrangements. Hopefully, with the upcoming drive, the exporters would get huge relief and reduced the working capital requirement.